Fleming, 59, from Balmullo, pleaded guilty on indictment to a charge under the Value Added Tax Act committed between May 2007 and July 2013.

His lawyer said he had managed to pay back the cash in full by selling property he owned, but a sheriff said the scam was too serious for him to avoid jail.

Loophole exploited

Fiscal depute Eilidh Robertson told Dundee Sheriff Court: "The business owned by the accused is involved in the sale of fish, which is zero-rated for VAT.

"As a result, the accused is lawfully entitled to claim back any VAT incurred by him in the expenses involved in the sale of this fish.

"All invoices showed exorbitant levels of haulage costs being claimed by him against his alleged purchase of huge quantities of fish.

"The accused's computer was later analysed and it was uncovered that these false invoices had in fact been created by the accused on it before he had submitted them on to his accountants and induced them to make the false claim on his behalf."

Defence solicitor David Bell said: "It appears the haulage company were not charging VAT and he was assuming it was included and was claiming it back.

"He then realised they were not adding VAT and he spotted the loophole and then exploited it over a lengthy period.

"He employs six people in the business and fears it will fold without him as he is heavily involved."

Sheriff Alastair Carmichael jailed Fleming saying: "This was a fraud carried out by you on public funds, so it was a fraud on the whole community."